We knew it would happen, right?
As gas prices climbed toward record highs this May, Florida Gov. Ron DeSantis (R) secured a pause on the state’s fuel taxes — a $200 million plan he helped pay for with a pot of federal funds awarded earlier in the pandemic.
The policy was intended to save money for local drivers and state coffers alike. But it also appeared to mark a potential violation of federal law — and the latest skirmish in an escalating clash between GOP officials and the White House over how states can use generous federal stimulus dollars.
More than a year after Congress approved a $1.9 trillion coronavirus relief package, Republicans in nearly two dozen states have ratcheted up efforts to tap some of those funds for an unrelated purpose: paying for tax cuts. The moves have threatened to siphon off aid that might otherwise help states fight the pandemic, shore up their local economies or prepare for a potential recession.
The intensifying Republican campaign targets one of the signature programs Democrats approved as part of President Biden’s American Rescue Plan last year. At the urging of the nation’s mayors and governors, Congress delivered what largely amounted to a blank check for every city and state to bolster their budgets.
Congress ultimately laid down few conditions for how local leaders could use the pot of money, which totaled $350 billion nationally. But they were clear about one thing: The federal government would not subsidize state tax cuts. Lawmakers led by Sen. Joe Manchin III (D-W.Va.) said at the time that Washington should not be on the hook to pay for reductions in state tax revenues, since that could leave major budget holes once federal aid ran dry.
Since then, however, GOP leaders have challenged the tax cut prohibition in federal courtrooms and state capitals. Attorneys general in 21 states have fought to overturn the Biden administration’s policy, federal court filings show, backed at times by powerful groups like the U.S. Chamber of Commerce, whose corporate members have lobbied conservative-leaning states to reduce their tax bills. In nearly every case, these legal efforts have prevailed, hamstringing the Treasury Department while opening the door for states to pursue their own tax cuts.
In Florida, the legal wrangling has enabled DeSantis and his political allies to leverage about $200 million in federal coronavirus aid to help pay for a planned suspension of the gas tax this October, according to state budget documents. Lawmakers essentially adopted a law that deposited its allotment under the stimulus program into the state’s general fund, then appropriated the money for the tax holiday, records show.
The policy, set to take effect later this year, could be in direct conflict with the federal tax restriction, local lawyers and advocates say. But Christina Pushaw, a spokeswoman for the governor, blasted the tax prohibition in a statement, calling it “not legally valid.”
The spending decisions have troubled some fiscal experts, who fear that the push for aggressive tax cuts this year could leave state budgets lacking much-needed revenue in the event of a recession. The moves also have flummoxed local advocates, who say that every federal dollar devoted to lowering tax bills is one less available for targeted relief — from improvements in housing to investments in aging infrastructure.
I think this was the money they wanted to retrieve for the new COVID relief package that didn’t pass this year. So they get to use it for their sacred tax cuts and running around like big heroes while the states that need more money because they used the original grant to save lives pay the price. Same old, same old …